Ongoing lease negotiations cited as main reason

The Students’ Society of McGill University (SSMU) has budgeted a deficit of $211,320 for this fiscal year, according to the revised fall 2012-2013 budget, which was released in late November.

SSMU knew last year that they would be facing an initial deficit of $274,751 due to higher expenses and lower revenues, as well as uncertainty surrounding ongoing lease negotiations with the University.

To reduce the deficit, the budget underwent two phases of cuts, where non-essential expenditures were abolished, and the position of one full-time building manager was removed. Money was taken from the Student Life Fund, which is accumulated surpluses from differents SSMU services.

“We could probably slash completely the majority of the services and most of the events we run, and still not make the deficit,” SSMU President Josh Redel said at one of SSMU’s biweekly Legislative Councils, November 29. “There is no way to account for a quarter million dollars.”

The Capital Expenditures Reserve Fund (CERF), part of SSMU’s budget which is set aside for renovations, student projects, and long term investments, will cover the remaining $211,320 to ensure that quality is not sacrificed during cuts. In an interview with The Daily, SSMU VP Finance Jean-Paul Briggs said, “the budget is lean and efficient while maintaining the same or greater levels of service.”

The CERF includes the investment portfolio, annual budget surpluses, capital assets, and an annual contribution of $50,000 from the Operating Budget. It is designed to allow SSMU to fund large projects and equipment expenditures beyond the scope of annual operations.

The revised fall budget stated “CERF is capable of covering the deficit with ease and this is precisely the type of situation a reserve fund is meant for,” although only as a short-term solution. According to audited financial statements, CERF has over $5 million.

According to the revised fall budget, the bulk of the deficit stems from the ongoing lease negotiations with McGill. SSMU has yet to sign a contract with the University for the Shatner building, and has not paid utilities for the past year.

“The budget is created conservatively to reflect the potential cost of utilities based off the direction of last year’s negotiations,” Briggs said. Due to the uncertainty, SSMU must remain flexible about its measures in the long-term, Briggs said, adding, “It’s impossible to know what the results of the negotiations will be and what exact strategy the outcome will ultimately require.”

Deficit notwithstanding, the revised fall budget passed in the Legislative Council meeting on November 29 without any initial opposition. Science Senator Moe Nasr was alone in challenging the bill, and failed to secure any support from his fellow councillors.

Nasr expressed concerns about dipping into reserve funds, and argued instead for more cuts. He highlighted a $25,000 expense for Plank, a new room-booking software, as an area where more cuts could have been made. “Every dollar makes a difference,” Nasr said.

In the meeting Briggs said, “[the] expenses in here are justified by the people responsible.”

The revised fall budget presented a series of increased expenses across all areas of the budget. Notable variations from last fiscal year’s budget include $16,000 for new work stations in SSMU, and the loss of a donation from La Prep that brought in $10,000 per year for three years.

General Manager Pauline Gervais explained at Council that SSMU also saw a loss of revenue due to a lack of summer rent during the turnover of restaurants on the second floor.

This turnover was also accompanied by extensive repairs, maintenance, and cleaning of the vacated space. The replacement of old equipment also accounted for heightened expenses, but Briggs assured that this was part of the long-term financial plan for the second floor cafeteria.

More expenses stemmed from the hiring of more student and permanent staff this year, resulting in a significant increase in salaries and benefits.

As a non-for-profit corporation, SSMU is not allowed to run a deficit; however, when asked by The Daily about this, Briggs provided no comment.

He did state in an email to The Daily that “the deficit has no immediate impact on the Society… the budget was created using very conservative projections in a time of extraordinary uncertainty.”

“As such, I felt that the benefits of showing a projected deficit and drawing from our reserves far outweighed the cost of further cuts that would be detrimental to the level of service the Society is able to offer,” he added.

An earlier version of this article incorrectly referred to reduced ‘non-essential services,’ when in fact it should have only referred to ‘non-essential expenditures’. The article also stated that SSMU had not paid rent to the University due to ongoing lease negotiations, in fact, SSMU has paid rent, though not utilities. Furthermore, the infographic attached to the article should have specified that the revenues and expenses assigned to 2012-2013 were budgeted amounts, and that the numbers assigned to 2011-2012 were final audited amounts. The Daily regrets the errors.